Ian Lord LAI President

What is LAI?
New term, new people, same question.  The short answer, of course, is that LAI is you and I.  LAI, as an institution, is an Illinois non-profit corporation with a corresponding tax status under U.S. law.  From the LAI Strategic Plan Session in Sacramento, what is less well understood is its structure.  In 1930, LAI was incorporated as a fraternity for the advancement of interests in land economics.  It was conceived as a spawning ground for Chapters to function, in local communities, by bringing together senior, respected members of multi-disciplinary professions that are decision makers and leaders.

LAI has done just that.  Through the years, 24 Chapters have been encouraged to develop in diverse communities on the same basic principles that are articulated first through an Affiliation Agreement and formally through the issuance of a local Chapter Charter in the name of the incorporated Chapter.

The model for the Chartered Chapters of LAI, is the corporate form of business activity.  Namely, an elected Executive, or Board, provides guidance, recommendations and leadership subject to the approval of the members, to the activities of the Chapters.

LAI as a corporation follows this exact model.  LAI’s board of directors is called its Executive Committee.  LAI’s “members” are the Chapter President representatives of the local Chapters sitting as the Board of Governors of LAI.  The Executive Committee of LAI reports to the Board of Governors semi-annually.

Every two years, the members or the Board of Governors, being the Chapter Presidents or their designates, are asked to elect an Executive Committee to provide guidance, recommendations and leadership to the corporation.  Because the Executive Committee of LAI under the LAI By-law has limited originating authority, LAI has instituted, since the year 2000, a series of semi-annual meetings for reporting and confirmation of the activities of the organization by its Board of Governors.  These meetings are attached to promotional, educational, sometimes academic and often social gatherings that have euphemistically become known as Land Economics Weekends or LEWs.  For LEWs, the basic division of responsibility between business meetings (LAI) and the programmed activities (local Chapter) are closely planned and defined by a planning protocol, budget and memorandum of agreement, being documentation to allocate costs and responsibilities.

Membership in LAI is a conjoined membership of LAI, a local Chapter or a Member-at-Large.  The local Chapter begins by LAI’s admission to membership of Members-at-Large who are supported in their local community as having met the membership criteria of an Honourable Society.  That core group of Members-at-Large are then shepherded through the local Chapter incorporation process for Charter issuance, including thereafter the delegated responsibility of identifying and inducting new members to the Society.
New members to LAI have responsibilities both to the local Chapter and to LAI, as the international federation, as detailed in Board of Governors approved Briefing Memoranda readily available on the LAI website at www.lai.org.

Despite over 80 years of existence, LAI has yet to explore its full potential of being a resource conduit for the appreciation of best practices in land economics, distilled from across its membership.  This is not a criticism but is an acknowledgement that the philosophy of an honourary society for the advancement of land economics has much work yet to be done.

LAI is strengthened as a corporation by its by-law structure providing for diverse responsibilities. 

Specifically, LAI’s Executive Committee has specified officers including five Regional Vice-Presidents geographically reflecting the distribution of Chapters around the world.  These Regional Vice-Presidents have direct accountability to the Chapters within their Region and have mandated responsibility for communication and the advancement and enhancement of those local Chapters.  The responsibilities include providing services, information, direction, communications and reporting on Chapter health.  These responsibilities are also set out in Briefing Memoranda as above described. 

For the purpose of initiating programs and advancing multiple other initiatives, the LAI Bylaw also constitutes ten Standing Committees supplemented by special purpose Ad Hoc Committees.  These Committees have historically been chaired by the elected twelve person Executive Committee.  In their capacity as officers and directors of LAI, as voting members of the Executive Committee and with the supplemental role of being a chair of a Standing Committee, the Executive Committee members of LAI are the resource and workhorses of LAI.  Successive Executive Committees, elected at two (2) year intervals, have served to maintain and identify strong consensual relationships with and across the Chapters of LAI.

Every member of LAI, however, is a volunteer to the Society.

A feature of our organization is the relatively short term by which office holders have carriage of their defined portfolios as officers.  Continuity of objective and sense of purpose is maintained through two simple devices:  moving through the offices of the Executive Committee of LAI and the Boards of Directors of each local Chapter; and new means of communications and dissemination reflected in LAI and local Chapter websites, LinkedIn.  Currently, proposed new directions for website interactive communications are being pursued by a special Committee of LAI to revamp the LAI website with user friendly linkages not only to all local Chapter websites for their use, but also for the membership at large. 

Many years ago LAI constituted a charitable foundation, the Land Economics Foundation (LEF) pursuant to a Declaration of Trust.  LEF is similarly constituted to the structure of LAI and each local Chapters.  LEF is lead by a Board of Directors of five elected on a rotating basis by the LEF Board of Trustees.  The Board of Trustees of LEF is none other than the local Chapter Presidents assembled for purposes of the Board of Governors of LAI, but convened separately as the Board of Trustees to effect the business of the Foundation.

In like manner, the Board of Directors of LEF and its Committees are the volunteer workhorses of the charitable activities of LEF.

In the activities of both LAI and LEF and to the extent elected by some local Chapters, our Society is assisted by a service provider, Nonprofit Solutions of Minneapolis, Minnesota, acting under contract.  The LAI Executive Director provides administrative services for a host of the Society’s organizational functions. 

These include:

1. Budget and Finance;
2. Land Economics Weekend (Spring and Fall);
3. Membership Dues and Collections;
4. All Business Meetings:  Drafting, Preparation and Attendance;
5. LAI Standing Committees (by Committee);
6. LAI Special Purpose / Ad Hoc Committees; (by Committee);
7. Membership Services:  Store, Induction Materials; Communications;
8. LAI Website;
9. KeyNotes;
10. LEF – all matters.

We are all members of the same Society.  We have the resources and the structures not just to convene and educate ourselves in local Chapters but also to provide in far flung communities the organizational vehicle that they too might offer conclaves of public and private expertise for the examination of issues common to their communities.  In asking what is LAI, it is my hope that our membership will be asking “What can I contribute to LAI?”.  LAI is you and I.

Ian Lord, LAI President

Lou Slade KeyNotes Editor

Small Town Story

I just read an article about small, independent bookstores that are opening and being profitable despite general economic conditions and the strong migration of the market toward digital reading. This is a subject near to my heart so this column is devoted to three success stories that I’m familiar with.

I believe that this small bookstore trend is happening because people are nostalgic for traditional booksellers, and the threat of loss of independent bookstores has caused people to make investment decisions based on emotions. I am one of those people. I also believe that these investments may pay off. The article I read about this subject cited one example of a successful author who is personally subsidizing a new small bookstore in Nashville because bookstores “shouldn’t become showrooms” for dot-com purchases. The article also cites other examples that involved neighborhood cooperative ownership of bookstores in order to keep them open.

Three businesses exist in my neighborhood with similar circumstances: a movie theatre, a neighborhood convenience food market, and a bookstore. These are small businesses and a small story, but I think it’s an important story. The businesses are successful and employ people, so that’s good. The community is enhanced by the presence of these businesses as you will see; that makes the neighbors happy, AND actually impacts our property values. Several friends who are real estate brokers tell me they cite these three businesses as amenities that influence people to make offers for homes in the neighborhood.

Avalon Movie Theatre
The Avalon is an historic movie theater that failed about 10 years ago and went and stayed dark for several years. The vintage building was purchased by a local developer who informed the community that if he got a theater operator as a tenant he’d keep the building but if not, he would have to tear it down.

There was strong community support to save the theater, and a group of leaders began a process that started with buying some time and then getting a low-cost initial lease from the developer. A fund-raising effort was successful, first to finance a quick rehabilitation of the building to meet code, then to identify an independent operator, and then to raise adequate funds to cover rents to satisfy the building owner.

The theater has managed to keep operating with the support of contributions to cover operating cost short-falls. It’s interesting to note that at first the major film distributors blocked the new operators from getting new movies as a way to block this new small competitor. The community corporation leadership got the mayor of Washington D.C. to use his political clout to mediate this problem and now the theater runs two first-run films on its two screens.

Major additional fundraising has been successful to enable the community corporation to buy the building and to finance a major restoration.

The theater operators have developed an aggressive set of programs that, in addition to running first run films, serve groups with special films for children, retirees, foreign and ethnic film aficionados, weddings, birthday parties and other special events.

Broad Branch Market
This is an historic neighborhood market that operated under grandfathered zoning on a site that is across the street from a pre-k through 5th grade public school imbedded in my residential neighborhood. The property has always been used as a neighborhood convenience store that included a good butcher shop.

Years ago, the tenant was a market operated for many years by a couple who became aged. Service had deteriorated and about ten years ago that tenant went out of business. The building stood dark for a few years while the owner tried to sell the property or to get a new tenant. Neighbors became concerned that the owner would sell to a residential developer who would raze the building and replace it with several townhomes.

The neighbors did not want to lose the market to redevelopment. An informal group was formed that organized the opposition to change and twisted the owner’s arm for time to find the right buyer that would maintain the use as a market. One of our neighbors who owns a construction business finally stepped forward and put a deal together pending getting approvals that included: expansion of the building, approvals to expand the activities within the market to include an on-site bakery, and the addition of a Montessori preschool. The community supported the new partnership and the property was sold and improved to include the new program.

The business opened a few years ago and has had much success because of great community support in spite of premium costs of goods. The owners/operators are neighbors who listen to their clientele and try to keep everyone interested and happy by various means such as employing neighborhood teenagers, providing special treats for the lower school kids, providing entertainment for the neighborhood preschool kids, and, when power crashed for several days during a major storm, the owners invited the entire neighborhood to a big, free barbeque party and cooked all the meat in the freezer before it spoiled.

Politics and Prose Book Store
This store started as a used bookstore about 40 years ago. The founders were two neighborhood women who were well-known and liked. Their initial plan was to create a salon atmosphere that would draw the relatively well-educated neighbors. They furnished the shop “shabby chic,” brought in speakers, formed specialty book clubs, organized overseas themed travel, and sponsored other events to build their market.

After some initial success, they found a larger store available across the street, and moved on a Sunday with the help of the D.C. police who held traffic while volunteer neighbors carried boxes of books across the street to help what had become a beloved neighborhood amenity.

P+P expanded in the new space, added new books and soon eliminated selling used books. The programs were enhanced and the store became an important venue for authors on book tours. Now the store has at least one speaker every day of the year. Many authors are such big draws that larger capacity off-site venues have to be used. Several years ago, Bill Clinton appeared for a book signing for his autobiography and I personally waited 3 hours in line in what was a linear block party.

Now, P+P is going through an ownership transition. One of the founders died recently and was mourned by hundreds of lovers of the store. Before she went, she and her business partner did a major search for a buyer and found one that the community seems to have embraced. The new owners are carrying on the traditions and at the same time testing digital modernization. I think the key to their success is to keep the broad neighborhood support that will buy their books retail rather than on-line or at the chains because they love the store enough to pay the premium.

Here’s the moral of this story. This community loves these three commercial establishments because they are locally owned, they are all fun places where you see your neighbors, they are within convenient walking distance, and the community is proud that we all care enough to invest in these traditions. These are the characteristics that make a great neighborhood.

Lou Slade, International LAI Editor

Liberty Station Receives Funding for Historic Renovations

Liberty Station is an award-winning 500-acre master-planned community near downtown San Diego. It is being developed on the site of the former Naval Training Center, most of which was built in the 1920’s. Much of the richness of San Diego history can be found in the many architectural influences on the former base. Liberty Station is an architectural masterpiece of the Spanish Colonial Revival style. (libertystation.com)

McMillin Companies (LAI member Mark McMillin) undertook the massive project in the late 1990’s and to date has built 350 homes, a highly successful Von’s anchored shopping center and several major office buildings. There are six schools at Liberty Station, including the highly successful High Tech High School.

In addition to new construction, McMillin has preserved more than two dozen historic buildings and recently received funding for $20,000,000 to restore eight more buildings. There are 26 historic buildings in total and seven have already been restored.  Among the buildings yet to be restored is an 1,800-seat theater. Of the space in the eight buildings about to be restored, 70% has already been spoken for.

The NTC Foundation is responsible for the restoration activity. Four members of the San Diego chapter of Lambda Alpha sit on the Board of Directors of the Foundation: Pam Hamilton (CEO of the Foundation), Rich Gustafson, Richard Opper and Janice Weinrick.

Alan N. Nevin, San Diego Chapter Scribe

O'Hare International Airport: A Global Perspective, with a Community Impact Focus.

On October 19, 2011, the City of Chicago's Department of Aviation Commissioner Rosemarie Andolino and other key O'Hare Modernization Program team members hosted over 50 Chicago- Ely Chapter members for a unique behind-the-scenes tour of the O'Hare International Airport airfield construction projects. Ms. Andolino, also a Lambda Alpha International Ely Chapter member, provided an energetic and informative presentation on O'Hare International Airport's status as a global airport, O'Hare's impact on business and development, the future of the O'Hare Modernization Program (OMP), the O'Hare Airport Express Rail Service, and the Chicago Department of Aviation's (CDA) sustainability initiatives.

Some little known O'Hare facts include:

• With 50% of the O'Hare visitors never setting foot out of the airport, there has been an increase in focus on retail offerings and other services that create a better “Chicago” experience in the terminals (such as brining in restaurants with ties to Chicago, such as Rick Bayless). 
• Getting to O'Hare will be faster in the future. The CDA is currently evaluating the express rail line services to downtown.  This would be a Public-Private Partnership model and would be in addition to the existing CTA Rail Blue Line service, and would be a premium offering to passengers.  An 18-month process is underway to identify passenger demand, technology, and alignment.  The downtown terminal has already been built and incorporated into the new downtown mixed-use development Block 37.
• The airport has led in the creation of the Sustainable Airport Manual, integrating the sustainable planning and practices into everyday functions of the airport.  In the OMP specifically, there has been significant work to strategically place soils around the airfield instead of hauling to landfills (18 million cubic yards) and on-site crushing of old runway materials, which in turn decreases the number of trucks hauling in /out of the site, minimizing carbon emissions.
• A major OMP tenet is to create a positive community impact on the greater Chicagoland area. An example of this is the partnering efforts of the CDA with the North Lawndale Employment Network and Sweet Beginnings, which has 23 beehives on the airport’s property and employs former convicts.  It’s a great collaboration that supports the environmental efforts of the airport in a unique way that sets O’Hare apart from other International airports.

Following the event, CDA issued a press release about the event highlighting Lambda Alpha International and the Chicago-Ely Chapter.

Upcoming Chapter events include: November 16, 2011 "Retail's Response to the Recession." The retail market sector felt the market downturn like the rest of the commercial real estate sector but retail being retail, it is responding quickly by evolving and responding in creative ways. Mike Mallon, Mallon & Associates and Past President of LAI Ely Chapter, shares what is around the corner as Retail Rebounds as he moderates this Retail Panel of experts: Peter Eisenberg, Clark Street Development (Developer's perspective), Lara Keene, Baum Realty Group (Broker perspective), and Fred Heichman (Landlord and Leasing Perspective).

Terri T. Haymaker, Ely Chapter Scribe

Healthcare Real Estate Trends

LAI - Phoenix Chapter presented a Medical Office panel on October 14th. Jeff Covill, Pickering Street Associates moderated a panel composed of Mike Brinkley, Executive Director Real Estate and Facility Design at John C. Lincoln Hospital (hospital representative), Julie Johnson, Executive Vice President GPE Commercial Advisors (broker representative), and Randy McGrane, Managing Director Ensemble Real Estate (investor/developer representative). A summary of their discussion follows.

The metro Phoenix medical office market is composed of 10.5 million square feet in 300 buildings of 20,000 SF or more, per CoStar. Aggregate vacancy is 30%, however Johnson reported that vacancy around hospital campuses run at 5-10%, while outlying, newer medical office buildings show 80-85% vacancy. Causes of high vacancy include the sale of doctor’s practices to hospitals, leaving a patchwork of vacancies that can be difficult to lease.

Banner, John C. Lincoln, Catholic Healthcare West, and Abrazo are all buying physician practices, with a focus on locations off campus, within neighborhoods. Hospitals are working to protect their market and increase market share through the construction of freestanding emergency rooms and acquisition of doctor’s practices. While a new hospital may cost $250 million to build, the freestanding emergency room comes in around $30 million in cost.

Healthcare real estate development is now favoring constructing outpatient facilities, built to meet clear demand. Inpatient versus outpatient healthcare facilities historically were split 60/40; today, that ratio is flipped, with 40% inpatient facilities and 60% outpatient. Adaptive reuse is desirable; developing a new building is a last resort, with affordability being the goal. These trends are driven by the increase the insured population combined with tremendous cost containment initiatives.

On –campus development is morphing toward centers of excellence, such as cancer treatment centers. Developers with affordable capital and the expertise to execute adaptive re-use projects will succeed. Large employers are bringing healthcare inside of businesses, and home based healthcare is rising. Going forward, providers are being reimbursed based upon patient’s outcomes, with an emphasis on a continuum of care.

Hospital admissions have evolved. Brinkley reported that two decades ago, 10-15% of hospital admissions were generated through the emergency room. Then, all elective surgeries moved off the hospital campus to freestanding buildings. This trend is a major factor in the source of today’s hospital admissions, 50-70% of which come from the emergency room.

Regulatory trends discussed include accountable care organizations (“ACO”) being created by hospitals/healthcare institutions. Similar to HMOs, ACOs combine the varying components of a patient’s healthcare need in order to increase patient care accountability. Hospitals will be graded by patient satisfaction, success, and efficiency metrics. ACO’ s use bundled reimbursements, where the ACO combines the practitioners needed to complete, say, a knee surgery, and the ACO is paid a lump sum, which will be distributed among the specialties used to effect the cure or procedure. This trend results in a change in the composition of medical office tenancy toward hospitals, and away from physician practices.

McGrane sees the hospital’s business changing from curing the sick, to managing the health of the population. Hospitals become the strongest competitor of the private healthcare real estate developer. He sees increasing prevalence of healthcare models like Kaiser Permanente, where the company owns the insurance company, the hospital, and the physician practices. The incentive is to keep patients well, with information being an essential, key tool to achieve the wellness goal. New development today must be driven by demand, not reimbursement levels, with the lowest cost solution being sought.

Models that work include combining urgent and primary care in one center with an outpatient emergency room. Healthcare is moving out of traditional providers, into retailers like Costco, CVS and Walgreens. Competition is strong, with razor thin margins. Alternative healthcare is growing, including wellness clinics, osteopaths, chiropractors, and medical homes.

Healthcare in the US is going through a major sea change, to move from its present state of being the best sick care system in the world, to being the best well care system. A hospital admission equals failure. Brinkley reports that hospitals have little money, without prospects for increased funding. Consequently, outsourcing will increase, and employees per licensed bed are expected to drop to 4.1% from 6.1% today. Administrative and duplicative costs will have to be removed, and McGrane expects, in the long term, U.S. healthcare to move toward a non-profit model, which is consistent with models elsewhere in the world.

Cynthia A. Hammond, Phoenix Chapter Scribe

Rob Nahigian and Trisha McCarthy

FOR IMMEDIATE RELEASE

NEWTON, MASS.
Rob Nahigian, FRICS, SIOR, CRE, MCR of Auburndale Realty Co, Newton, Mass. was recently awarded by the Massachusetts Association of Realtors as the “2011 Massachusetts Real Estate Educator of the Year.” The recognition was made on October 18, 2011 at the MAR State Convention’s Professional Awards & Recognition Dinner with approximately 200 people in attendance. The dinner and convention was held at the DCU Center, Worcester, Mass. Trisha McCarthy, President-Elect stated that the award to Rob was in recognition of his demonstrated commitment to promoting the professional growth of agents and brokers through course instruction, curriculum development, and contributions of academic and/or written work to industry publications. Rob is a state-certified continuing education instructor and serves on the Mass. Real Estate Licensing Commission’s Education Subcommittee. He writes, designs and teaches real estate courses and programs for state and local REALTOR Associations and national real estate organizations. He has written dozens of state CE courses and serves on the faculty at Boston University, Society of Industrial and Office Realtors, MAR and the coveted NAR Commercial Signature Series Speakers Bureau. He also serves on the Board of Directors of Boston’s Commercial Brokers Association, SIOR Chapter and LAI. He serves as the New England Chapter Chair of the Counselors of Realtors and its National Editor In Chief.

Additionally on Oct. 19, 2011 Rob delivered two programs at the MAR State Convention, Commercial Real Estate Transactions and Anatomy of the Commercial Building.

The Educator of the Year Award submissions were due in June and based on the nominee’s contributions to creating or enhancing education programs or courses offered to Realtors or licensees; educational seminars or designation classes at which the nominee served as an instructor or speaker; list of relevant industry-related articles, columns or books that the nominee has written; all related activities within the Realtors organization at the state or local levels which demonstrate the nominee’s dedication to educational pursuit and increasing real estate professionalism; and a demonstration of how the nominee has contributed on an on-going commitment to the role of real estate educator including achievements and designations.

LEF is a not-for-profit charitable foundation organized to administer an investment fund which provides grants for research projects related to land economics. Over the past three years LEF has committed capital (5% of assets) to a number of significant and worthwhile endeavors across the country on a matching basis with other non-profit entities. The following are projects LEF has funded to-date.

Steven R. Gragg MAI, FRICS, LEF President

Lambda Alpha International (LAI) has recently created a group on Linkedin.com. Linkedin is an online professional network of more than 60 million professionals in over 150 industries. Linkedin is a great place to exchange information, ideas and opportunities. Linkedin allows you to:

• Stay informed about your contacts and industry,
• Find the people & knowledge you need to achieve your goals, and
• Control your professional identity online.

Our LAI Linkedin group will provide a means to further promote communication and networking among LAI members. Please join us at LAI’s newest place to network: www.linkedin.com.

Moving? Changing Jobs? Name Changed?

Please visit the Members Only section of the LAI Website and under the Member Services section you can update your profile.

Forgot how to login? No problem.

Please visit the LAI Website at www.LAI.org. On the left hand side click on the Members Only Tab. Here you will need to use your email and the password is lai.